GST Rules for Proprietors: Can One PAN Have Multiple Registrations?

” Wondering if you need a separate GST registration for a new trade name under proprietorship? Learn when one PAN can have multiple GSTINs, compliance rules, and penalties to avoid. Get clarity on running multiple businesses under a single owner. Read now for expert insights on GST registration for proprietors!”

The Goods and Services Tax (GST) regime in India has streamlined taxation for businesses, replacing a complex web of indirect taxes with a unified system. For sole proprietors running multiple businesses, a common question arises: Should I take another GST registration for another business with a new trade name under proprietorship? This decision can impact compliance, operational efficiency, and tax benefits like Input Tax Credit (ITC). In this comprehensive blog post, we’ll explore the latest GST rules, analyse the pros and cons, and provide actionable insights to help you decide. Whether you’re a small business owner, freelancer, or entrepreneur, this guide will clarify your options with up-to-date information and practical advice.

Understanding GST Registration for Proprietorship

A sole proprietorship is one of India’s simplest business structures, where a single individual owns and operates the business. Unlike companies or partnerships, proprietorships don’t require formal registration under the Companies Act. However, GST registration becomes mandatory under certain conditions, as outlined in the Central Goods and Services Tax (CGST) Act, 2017, and its subsequent amendments.

The GST threshold limits remain:

• Goods-based businesses: ₹40 lakh annual turnover (₹10 lakh in Northeastern and hilly states).
• Service-based businesses: ₹20 lakh annual turnover (₹10 lakh in special category states).
• Interstate suppliers, e-commerce operators, and others: Mandatory registration irrespective of turnover.

For a proprietorship, GST registration is tied to the proprietor’s Permanent Account Number (PAN). This raises an important question: if you start a new business under a different trade name, do you need a separate GST registration, or can you operate under your existing GSTIN? Let’s break this down step-by-step.

What is a Trade Name in GST?

Before addressing the core question, it’s essential to understand the difference between a legal name and a trade name under GST:

• Legal Name: The name linked to your PAN (e.g., your personal name for a proprietorship).
• Trade Name: The business name you use for branding, marketing, or operations (e.g., “Sharma Electronics” or “Priya Consultancy”).

During GST registration via Form GST REG-01, you provide both names. The GST certificate (Form GST REG-06) reflects your legal name and trade name(s), allowing flexibility in how you present your business to customers.

For example:

• Legal Name: Priya Sharma
• Trade Name: Priya Consultancy

If Priya starts another venture, say “Priya Boutique,” can she use the same GSTIN, or does she need a new one? This is where the decision-making process begins.

Can You Have Multiple Businesses Under One GSTIN?

Under the GST framework, a single PAN can support multiple GST registrations, but the rules depend on the business structure and location. For a proprietorship, here’s what the law says:

1. Same State, Same Business Vertical

If your new business operates in the same state as your existing one and falls under the same business vertical, you don’t need a separate GSTIN. A business vertical refers to distinct operations with separate revenue streams, clients, or product lines, but the definition has evolved since the 2018 amendment to the CGST Act.

Post the Central Goods and Services Tax (Amendment) Act, 2018 (effective February 1, 2019), the restriction on mandatory separate registrations for different business verticals within the same state was removed. Now, you can:

• Add the new trade name and additional place of business (if applicable) to your existing GSTIN via an amendment.
• Maintain separate bookkeeping for each trade name under one GSTIN.

Example: If Priya Sharma runs “Priya Consultancy” (services) and starts “Priya Boutique” (retail) in Delhi, she can add “Priya Boutique” as an additional trade name under her existing GSTIN by filing an amendment under “Non-Core Fields” on the GST portal.

2. Same State, Different Business Verticals

If the new business is a distinct vertical (e.g., different goods/services, separate clientele), you can opt for a separate GST registration within the same state, even though it’s not mandatory. This is allowed under Section 25(2) of the CGST Act, which permits multiple registrations for distinct business verticals under one PAN.

Example: Priya’s consultancy serves corporate clients, while her boutique targets retail customers. She could apply for a second GSTIN for “Priya Boutique” to keep finances and compliance separate.

3. Different States

If your new business operates in a different state, you must obtain a separate GSTIN for each state, as per Section 25(1) of the CGST Act. The first two digits of the GSTIN reflect the state code, making this a legal requirement.

Example: If Priya expands “Priya Boutique” to Mumbai (Maharashtra), she needs a new GSTIN for Maharashtra, even if she uses the same trade name.

Should You Take Another GST Registration? Pros and Cons

Deciding whether to take a separate GST registration for a new trade name under proprietorship involves weighing the benefits against the challenges. Here’s a detailed analysis:

Advantages of a Single GSTIN

1. Simplified Compliance: One GSTIN means filing a single set of returns (e.g., GSTR-1, GSTR-3B), reducing paperwork and complexity.
2. Cost Efficiency: No additional registration fees or compliance costs.
3. Input Tax Credit (ITC) Pooling: Taxes paid on inputs for both businesses can be offset against the output tax liability under one GSTIN.
4. Ease of Management: A single GST account simplifies tracking and audits.

Disadvantages of a Single GSTIN

1. Mixed Financials: Combining revenues and expenses from different businesses can complicate accounting, especially if the businesses have distinct models (e.g., services vs. goods).
2. Branding Confusion: Customers might not differentiate between trade names under one GSTIN, affecting brand identity.
3. Audit Risk: If one business faces scrutiny, it could impact the other under the same GSTIN.

Advantages of Multiple GSTINs

1. Clear Separation: Separate GSTINs allow independent financial tracking, invoicing, and compliance for each trade name.
2. Brand Autonomy: Distinct GSTINs reinforce the uniqueness of each business, enhancing customer trust.
3. Risk Isolation: Issues with one business (e.g., tax disputes) won’t affect the other.
4. Flexibility: Easier to sell or close one business without disrupting the other.

Disadvantages of Multiple GSTINs

1. Increased Compliance Burden: Separate returns, audits, and record-keeping for each GSTIN add to the workload.
2. Higher Costs: Additional registration and maintenance efforts may increase expenses.
3. ITC Restrictions: Input credits can’t be pooled across GSTINs within the same state, potentially raising tax liability.

How to Add a New Trade Name to an Existing GSTIN

If you decide to operate under one GSTIN, adding a new trade name is straightforward.This falls under Non-Core Fields, meaning it doesn’t require tax officer approval and updates automatically. Here’s the process:

1. Log in to the GST Portal: Visit www.gst.gov.in and use your credentials.
2. Navigate to Amendment: Go to Services > Registration > Amendment of Registration Non-Core Fields.
3. Select Business Details: Click on the “Business Details” tab and find the “Trade Name” section.
4. Add New Trade Name: Enter the new trade name (e.g., “Priya Boutique”) and save.
5. Verification: Submit the form with Digital Signature Certificate (DSC) or EVC. You’ll receive an Application Reference Number (ARN) via email/SMS.
6. Approval: The updated GST certificate reflecting the new trade name is available for download within minutes.

Documents Needed: No additional documents are typically required unless the trade name reflects a new place of business, in which case address proof (e.g., rent agreement) may be requested.

How to Apply for a Separate GST Registration

If you opt for a new GSTIN, follow these steps:

1. Visit the GST Portal: Go to Services > Registration > New Registration.
2. Fill Form GST REG-01: Select “Taxpayer” and enter your PAN, state, and new trade name.
3. Submit Documents: Upload:
   • PAN and Aadhaar of the proprietor.
   • Address proof for the new business location.
   • Bank account details (cancelled cheque or statement).
   • Photograph of the proprietor.
4. Verification: Complete OTP-based verification or use DSC/EVC.
5. Processing: A GST officer reviews the application. If approved, you’ll receive a new GSTIN within 3-7 working days.

Cost: GST registration is free, but professional assistance (if sought) may cost ₹500-₹2,000.

Latest Updates in GST Rule

Here are the latest developments impacting this decision:

• GSTN Enhancements: The GST portal now supports seamless addition of up to nine trade names under one GSTIN, improving flexibility for proprietors.
• ITC Transfer: Form ITC-02A allows unutilized ITC to be transferred to a new GSTIN within the same state, easing transitions for separate registrations.
• Compliance Calendar: The GST Council’s meeting emphasized stricter return filing deadlines, making multiple GSTINs more burdensome for small businesses.

These updates suggest that while separate GSTINs are viable, a single GSTIN with multiple trade names aligns better with simplification goals.

Making an Informed Decision

So, should you take another GST registration for another business with a new trade name under proprietorship? It depends on your business goals, scale, and operational complexity. For small, localized ventures, adding a trade name to your existing GSTIN is simpler and cost-effective. For diverse or large-scale businesses, a separate GSTIN offers clarity and flexibility, despite the added compliance burden.

The GST regime supports both options, giving proprietors the freedom to choose based on their needs. Consult a tax professional to evaluate your specific case, especially if ITC or interstate operations are involved. With the right approach, you can optimize your tax strategy and focus on growing your businesses.